Big Six Banks Explore Tokenized Deposits in Canadian Dollars
Canada's Big Six banks are jointly exploring the development of tokenized deposits in Canadian dollars. The six banks - Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank, and TD Bank Group - have agreed to work together on this project.
The first stage will test moving tokenized deposits between Canadian financial institutions, while the longer-term aim is to connect with other digital-asset initiatives. This system could support faster, programmable payments available at any hour, with customer funds remaining inside the regulated banking system.
Tokenized deposits and stablecoins are often confused due to their similarities, but they have key differences. Tokenized deposits are ordinary bank deposits recorded on a blockchain or digital ledger, while stablecoins create new assets backed by reserves. The Big Six banks have chosen the route of tokenizing existing deposits, with each bank responsible for those deposits and controls.
The project's exploratory nature means it does not yet commit the banks to issuing tokenized deposits. An academic at the University of Toronto's Rotman School of Management described the agreement as 'essentially an agreement to develop the technology together.' While coordination has changed, customers will receive no new product until further notice.